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Foundational Principles of Contract Law$
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Melvin A. Eisenberg

Print publication date: 2018

Print ISBN-13: 9780199731404

Published to Oxford Scholarship Online: October 2018

DOI: 10.1093/oso/9780199731404.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 23 October 2021

Liquidated Damages

Liquidated Damages

(p.283) Twenty-Three Liquidated Damages
Foundational Principles of Contract Law

Melvin A. Eisenberg

Oxford University Press

Chapter 23 considers contract provisions that liquidate—fix—damages for breach. Such provisions are reviewed with special scrutiny. The most general formulation of the special-scrutiny rule is that liquidated damages provisions are enforceable only if actual damages are difficult to estimate and the liquidated amount is a reasonable estimate of the actual loss from breach. It is sometimes incorrectly argued that the special-scrutiny rule rests on the premise that liquidated-damages provisions lend themselves to blameworthy exploitation and one-sidedness, that this premise is incorrect, and thus the special-scrutiny rule is incorrect. The true justification of the special-scrutiny rule, however,is that liquidated-damages provisions are systematically likely to reflect the limits of cognition.

Keywords:   liquidated damages, special scrutiny, damage estimating difficulties, loss from breach, liquidated-damages provisions

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